1. The Field of the Invention
The present invention relates to electronic authorization of financial transactions, and in particular, to electronic authorization of specific predetermined transactions. More particularly, the present invention relates to specific authorization of individual transactions otherwise inhibited or prohibited.
2. Present State of the Art
Modernly, more and more transactions in commerce have come to rely upon the convenience of utilizing a transaction card such as a credit card for the purchasing of goods and services. As credit cards have become more ubiquitous, so also has the infrastructure supporting the use of credit cards in commerce. At one point, what was a simple relationship between a card issuer and a cardholder has evolved to include intermediaries providing authorization services and financial distribution services. Such an expansive infrastructure has come to facilitate on-line or near real-time transaction authorization.
Furthermore, because of the extensive nature of the credit card infrastructure, additional users, not necessarily relying upon credit, also utilize the existing infrastructure in carrying out commerce. For example, businesses or corporations may establish a series of accounts with a card issuer and distribute transaction cards to their members for use in executing cashless transactions. To minimize fraud and abuse in the purchasing of goods and services, authorization standards have been established. FIG. 1 represents a standardized authorization process for transaction verification. An account manager, such as a fleet manager or other entity, desiring cashless transaction privileges contacts a card issuer 114 to request the extension of transaction privileges through an established account request 116. Typically, when establishing a credit account, card issuer 114 places restrictions such as transaction amount limitations upon the card user. However when establishing accounts for business or other like users, account manager 102 may request that card issuer 114 deny certain transactions and strictly enforce other limitations on transactions.
Exemplary desired account limitations include restrictions on the types of services and goods that may be procured by an account user 104 as directed by account manager 102. Industry standards have been established for the partitioning of goods and services into categories designated by a standard industrial code (SIC). A merchant 106 is assigned a specific standard industrial code corresponding to their predominate business function. For business transactions that adhere to the SIC coding, transactions originating at a point of sale terminal having a restricted SIC identifier may be unable to obtain proper authorization to complete a transaction with an account user. Other limitations frequently desired by account managers include transactional limits. Transactional limits may include single transaction limits or aggregate limitations upon successive transactions.
Card issuer 114 upon the establishment of an account may employ a third party authorizing agent to provide authorization services and strictly enforce transaction limitations as agreed upon between account manager 102 and card issuer 114. Card issuer 114 through an establish authorization request 118 informs authorizing agent 112 of the transaction terms under which transaction authorization may be granted.
Once an account has been established account manager 102 provides the account information necessary to enable account user 104 to engage in commerce transactions. Such account information generally includes an account number as assigned by card issuer 114. The predominate form of providing account information to account user 104 is to provide account user 104 with a transaction card generally taking the form of a credit card-like card bearing the account number thereon. Account user 104 upon initiating a transaction with a merchant 106 engages in a payment presentment step 120 by providing the requisite account information to merchant 106. Merchant 106 engages in an authorization process to verify that the transaction parameters of the present transaction are within the boundaries or limitations placed upon the account as requested by account manager 102 or imposed by card issuer 114. An authorization request 122 issued by merchant 106 is comprised of an account number, a transaction amount and other parameters such as a standard industrial code (SIC), a merchant identifier (MID) and an acquiring bank identification number (BIN).
A merchant 106 typically associates with an acquiring bank 108 which provides funding services of merchant transactions. Authorization requests may electronically pass through acquiring bank 108 as designated by the BIN of the authorization request and additionally may route through a card company 110 (e.g., MasterCard.RTM., VISA.RTM., Discover Card.RTM. or American Express.RTM.) prior to reaching authorizing agent 112 for comparison of account parameters. Authorizing agent 112 compares the transaction parameters for conformance with account limitations. Authorizing agent 112 issues an authorization response 124 comprising an acceptance or denial indicator.
During general authorization processing, funds generally do not transfer at that time. A settlement generally occurs at a periodic time such as evenings or nights when a merchant re-initiates communication with an authorizing agent and presents a series of accepted and authorized transactions occurring throughout the previous period and requests financial settlement of such transactions. Merchant 106 initiates a settlement request 126 with authorizing agent 112 which generally comprises the account number to be debited, the amount of the debit and other information such as SIC, MID and BIN designators. As part of the settlement process, authorizing agent 112 issues a settlement request 128 to card issuer 114. Frequently a settlement request 128 includes less cryptic merchant information (i.e., merchant name and city/state address instead of MID) for later presentment to an account manager. Card issuer 114 in a payment settlement response step 130 passes payment information on to merchant's acquiring bank 108 with the appropriate funds transferring in a step 131.
At yet another periodic point in time, card issuer 114 provides a billing account 132 to account manager 102 for notification of payment due or for other record keeping purposes. Such billing account information may be presented in 18 various forms including printed statements as well as electronic reporting. In such generic authorization processing as described above, billing account information contains relatively little and non-descriptive information such as an account number, a transaction amount and merchant information.
At least three particular shortcomings of the authorization process as described in FIG. 1 should be pointed out. First, authorization performed by authorizing agent 112 provides a regulation of transactions by either proscribing transactions originating at a merchant having a proscribed SIC goods/services designator, or withholding authorization from transactions that exceed transactional limits. Such an authorization process approves transactions of values less than the transactional limits transpiring at non-proscribed merchant point of sale terminals having a non-barred SIC goods/services designator. Prior art authorization techniques do not provide a method or system for enforcing strict transaction parameters prior to authorization of restricted transaction types on a transaction by transaction basis. Additionally prior art techniques do not permit an account manager to create transaction authorization parameters without re-initiating account establishment procedures.
A second shortcoming of the authorization processing in the prior art relates to billing account information sent from card issuer 114 for evaluation by account manger 102. As shown in FIG. 1, the billing account information is comprised of an account number and an amount coupled to merchant information such as the name and city of the merchant. An account manager does not have a tracking mechanism to track the execution of a specific transaction and the billing of such a transaction on a billing statement if the vendor and acquiring bank cannot provide this functionality. In prior art configurations, the account manager only discerns that a certain amount of money, a transaction amount, was exchanged with a specific merchant.
Other transaction systems have incorporated item descriptions generally ascertainable from SKU numbers listing goods or services obtained from the listed merchant into their billing statements. It should be noted that such techniques still do not provide a tracking mechanism for linking a specific authorization procedure to a billing account printout.
A third short coming of the authorization processing in the prior art relates to the inability to prevent fraudulent successive transactions using the account number of an account user once it has been divulged to a merchant. In many instances and applications, transactions are performed remotely from the physical presence of the account user thereby foreclosing the account user from discretionary evaluation of the credibility of the merchant with which an account user's account number would be divulged. In such an application, the rogue merchant would be free to utilize the account number in successive authorization requests and alternatively could resell or post an account user's account number for indiscriminate use by other devious entities. Because such an opportunity exists such as in the case of remote network and chiefly Internet purchasing environments, account users have theretofore been hesitant to engage in electronic commerce using a credit or other form of transaction card or vehicle that exposes an account user's account number into an environment whose security is at best suspect.
Accordingly, what is needed is a method and system for authorizing in advance or pre-authorizing transactions that but for specific authorization, are otherwise proscribed.
What is also needed is a method and system for enforcing parameters upon such pre-authorized transactions such as transaction amounts, specific merchants and other transaction related parameters.
Also, what is yet needed, is a method and system for facilitating an audit or record reconciliation from a pre-authorized transaction through the billing of the account thus informing an account manager of the completion of a pre-authorized transaction.